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Tolko Industries has opened the largest lumber reload centre in B.C., but the products being loaded into containers at the Richmond site are not bound for B.C.’s traditional markets in the U.S. — they are all going overseas to Asia.

The building spans 1.6 hectares alongside the Fraser River, and can store enough wood to fill 30,000 containers a year. That’s enough lumber and panelling products to make 90,000 new homes a year, and according to John Langley, Tolko’s general manager of export sales, the new reload centre shows how significant the Asian market has become for Vernon-based Tolko, the world’s fifth-largest producer of softwood lumber.

The $12-million facility was officially opened for business on Monday, adding 35 new jobs and consolidating Tolko’s distribution system from 12 locations into one.

Fed by a railway line, production from 10 of Tolko’s Interior mills is funnelled to the site, where Tolko has easy access to containers that arrived full from China. Instead of going back empty, they are now going back loaded with B.C. wood.

“It’s a very strategic move for Tolko, we purpose-built it with a long-term view of the various markets we are servicing,” Langley said.

Five years ago, Tolko was shipping eight per cent of its wood products offshore. Most of the rest, 80 per cent, was going to the U.S. “We are up to 40 per cent to Asia now, and that’s really what motivated the investment,” Langley said. “These markets we are involved in now are here to stay; particularly China, but obviously Japan, which is a much longer-standing market, Korea, and Taiwan.

Further, he said, Chinese customers are moving up the value chain, adding higher grades of lumber to their purchasing list. “We think the demand is going to be ongoing and we will see more value,” Langley said.

The U.S. accounts for only 50 per cent of Tolko’s production now.

The growth of China as a destination for B.C. wood products has evolved over the last few years from a market that was considered a novelty to some and to others a convenient place to send excess lumber until the U.S. recovered, to the point that is now a permanent part of the B.C. lumber scene.

According to the Vancouver research group International Wood Markets, despite a drop in China’s overall appetite for lumber — it declined 1.3 per cent during the first seven months of 2012, — and on-the-ground evidence of building sites being left unfinished, Canadian exports have still risen by two per cent. Canada was the world’s top lumber exporter last year, sending 3.8 million cubic metres of lumber to China for the first seven months, surpassing even Russia, which exported 3.6 million cubic metres.

Wood Markets consultant Alice Palmer said that even when U.S. housing starts begin to pick up, B.C. producers will still serve their Chinese customers to ensure they have broader market access.

David Elstone, an analyst with the consulting firm ERA Forest Products Research, said China came along at just the right time for the B.C. lumber sector. “We have a whole spectrum of markets to service which is wonderful, given that we have the mountain pine beetle and the lower quality wood generated because of it,” said Elstone.

“It’s a whole new ball game going forward. A whole new scenario with China. Five years ago they were a concept, rather than a reality.

“Now we are seeing, with Tolko building a reload centre, confirmation that this is not a flash in the pan. This market is going to be part of the big picture going forward. Given the situation we have, in terms of the recovering U.S. market, and the prospects of a diminishing timber supply in the B.C. Interior, it is sure going to create an interesting dynamic in the future.”

That dynamic, which has at its core diversified markets for most of the grades of lumber produced in B.C., will likely mean higher prices, not just in the U.S. but in Asia as well, he said.

Japan is still taking top-grade lumber, termed J-Grade from Interior mills, Elstone said, while China is taking lower-grade lumber and using it for construction forms or remanufacturing it into interior wood products such as mouldings.

And the U.S. is taking the middle grades for its own sluggish home-building industry.

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Tolko facility signals Asian markets here to stay

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